Part XIII - Trade & Commerce • Article

Article 306 Simplified: Power of certain States in Part B of the First Schedule to impose restrictions on trade and commerce

Article 306 allowed former princely states (Part B states) to impose taxes and trade restrictions on goods coming from other parts of India during a transition period. This was omitted in 1956 to ensure free trade throughout the country.

Official Text

Omitted by the Constitution (Seventh Amendment)Act, 1956, s. 29and Sch.(w.e.f. 1-11-1956)

Simple Meaning

Explain Like Ten

This old rule was deleted. It used to let royal kingdoms that joined India charge taxes at their borders for a short transition period. Now, state borders are completely free for trade.

Student Mode

Article 306 was a transitional provision that allowed former princely states (classified as Part B states, like Hyderabad or Mysore) to continue imposing customs duties or restrictions on trade and commerce, subject to agreements with the Union. It was repealed by the Constitution (Seventh Amendment) Act, 1956, to remove all internal trade barriers.

Example

In 1952, a merchant carrying cotton from Bombay to Hyderabad might have faced trade duties at the border under Article 306. This was omitted in 1956 to create a single free market.

Key Takeaway

The omission of Article 306 established a unified national market, preventing states from setting trade barriers.

FAQs

What did Article 306 allow Part B states to do?

It temporarily allowed former princely states that joined India to continue imposing taxes or duties on goods entering their territories, to prevent sudden financial loss.

Why was Article 306 omitted in 1956?

It was omitted by the 7th Constitutional Amendment because the distinction between Part A and Part B states was abolished, and internal trade barriers had to be eliminated to create a unified national market.